4. Calculating interest rates Aa Aa The real risk-free rate (r*) is 2.8% and is expected to remain constant. Inflation is expected to be 5% per year for each of the next three years and 4% thereafter The maturity risk premium (MRP) is determined from the formula: 0.1(t-1)%, where t is the security's maturity The liquidity premium (LP) on all Tahoe Hydroponics's bonds is 1.05%. The following table shows the current relationship between bond ratings and default risk premiums (DRP) Rating U.S. Treasury Default Risk Premium 0.60% 0.80% 1.05% 1.45% Tahoe Hydroponics issues seven-year, AA-rated bonds. What is the yield on one of these bonds? Disregard cross-product terms; that is, if averaging is required, use the arithmetic average O 9.08% O 5.25% O 9.68% 8.63%